Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

A buy-side analyst with over 15 years of experience investing in Asian markets and specializing in the mid-small cap space, emphasizing value investing in companies with good free cash flows/dividends and long-term holding horizons. 
Exempt Financial Adviser (EFA) under CrossASEAN Research Pte Ltd. It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity, Bottom-up Analyst

Times Neighborhood - Value+Growth, Could It Be an Acquisition Target?

Times Neighborhood: Good H1 2021 on the Cards

Takeaways from the Times Neighborhood Investment Debacle

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/times-neighborhood-holdings" target="_blank" data-smartkarma-citation="entities:28666:1" rel="noopener">Times Neighborhood (9928 HK)</a> reported stellar results for their H1 2020 on the 12th of August 2020. 
<h2>Key highlights of the results </h2>
<ul>
<li>Profit for H1 2020 was up 99% YoY (76% YoY exclusive of the listing expenses). Despite a rally in the sector, <a href="https://www.smartkarma.com/entities/times-neighborhood-holdings" target="_blank" data-smartkarma-citation="entities:28666:1" rel="noopener">Times Neighborhood (9928 HK)</a> remains one of the cheaper names amongst its peers on a PEG(x) multiple. The company is well on track to achieving its forecast of 220 mn RMB PAT for 2020, representing a 90% YoY profit growth (exclusive of listing expenses). From the table below, you can see it is one of the highest growth names in the sector.</li>
</ul>
<table class="table table-striped">
<colgroup> <col> <col> <col> <col> <col span="5"> <col> </colgroup>
<tbody>
<tr>
<td style="width: 100.889px;">Company</td>
<td style="width: 46.6667px;">Ticker</td>
<td style="width: 30.6667px;">Price</td>
<td style="width: 60.8889px;">Mkt cap (US$m)</td>
<td style="width: 50.2222px;">PER 2019 (x)</td>
<td style="width: 46.6667px;">PER FY20 (x)</td>
<td style="width: 48.4444px;">PER FY21 (x)</td>
<td style="width: 48.4444px;">PER FY22 (x)</td>
<td style="width: 49.3333px;">3-Yr EPS CAGR (%)</td>
<td style="width: 51.1111px;">PEG</td>
</tr>
<tr>
<td style="width: 100.889px;">

 Country Garden S 
</td>
<td style="text-align: right; width: 46.6667px;">

6098 HK
</td>
<td style="text-align: right; width: 30.6667px;">         49.30</td>
<td style="text-align: center; width: 60.8889px;">              17,553</td>
<td style="text-align: center; width: 50.2222px;">           70.4</td>
<td style="text-align: center; width: 46.6667px;">           52.7</td>
<td style="text-align: center; width: 48.4444px;">           38.4</td>
<td style="text-align: center; width: 48.4444px;">           28.6</td>
<td style="text-align: center; width: 49.3333px;">           35.0</td>
<td style="text-align: center; width: 51.1111px;">            1.5</td>
</tr>
<tr>
<td style="width: 100.889px;">

 A-Living Servi-H 
</td>
<td style="text-align: right; width: 46.6667px;">

3319 HK
</td>
<td style="text-align: right; width: 30.6667px;">         43.30</td>
<td style="text-align: center; width: 60.8889px;">                7,449</td>
<td style="text-align: center; width: 50.2222px;">           42.2</td>
<td style="text-align: center; width: 46.6667px;">           30.0</td>
<td style="text-align: center; width: 48.4444px;">           22.9</td>
<td style="text-align: center; width: 48.4444px;">           18.2</td>
<td style="text-align: center; width: 49.3333px;">           32.3</td>
<td style="text-align: center; width: 51.1111px;">            0.9</td>
</tr>
<tr>
<td style="width: 100.889px;">

 Poly Property -H 
</td>
<td style="text-align: right; width: 46.6667px;">

6049 HK
</td>
<td style="text-align: right; width: 30.6667px;">         77.30</td>
<td style="text-align: center; width: 60.8889px;">                5,519</td>
<td style="text-align: center; width: 50.2222px;">           57.2</td>
<td style="text-align: center; width: 46.6667px;">           52.1</td>
<td style="text-align: center; width: 48.4444px;">           38.0</td>
<td style="text-align: center; width: 48.4444px;">           28.0</td>
<td style="text-align: center; width: 49.3333px;">           26.9</td>
<td style="text-align: center; width: 51.1111px;">            1.9</td>
</tr>
<tr>
<td style="width: 100.889px;">
 
Greentown Service 
</td>
<td style="text-align: right; width: 46.6667px;">

2869 HK
</td>
<td style="text-align: right; width: 30.6667px;">         10.20</td>
<td style="text-align: center; width: 60.8889px;">                4,234</td>
<td style="text-align: center; width: 50.2222px;">           53.8</td>
<td style="text-align: center; width: 46.6667px;">           42.5</td>
<td style="text-align: center; width: 48.4444px;">           32.6</td>
<td style="text-align: center; width: 48.4444px;">           25.5</td>
<td style="text-align: center; width: 49.3333px;">           28.2</td>
<td style="text-align: center; width: 51.1111px;">            1.5</td>
</tr>
<tr>
<td style="width: 100.889px;">

 China Overseas P 
</td>
<td style="text-align: right; width: 46.6667px;">

2669 HK
</td>
<td style="text-align: right; width: 30.6667px;">           7.59</td>
<td style="text-align: center; width: 60.8889px;">                3,219</td>
<td style="text-align: center; width: 50.2222px;">           46.4</td>
<td style="text-align: center; width: 46.6667px;">           36.0</td>
<td style="text-align: center; width: 48.4444px;">           27.9</td>
<td style="text-align: center; width: 48.4444px;">           22.3</td>
<td style="text-align: center; width: 49.3333px;">           27.7</td>
<td style="text-align: center; width: 51.1111px;">            1.3</td>
</tr>
<tr>
<td style="width: 100.889px;">

 Ever Sunshine Li 
</td>
<td style="text-align: right; width: 46.6667px;">

1778 HK
</td>
<td style="text-align: right; width: 30.6667px;">         14.70</td>
<td style="text-align: center; width: 60.8889px;">                3,168</td>
<td style="text-align: center; width: 50.2222px;">           90.4</td>
<td style="text-align: center; width: 46.6667px;">           56.1</td>
<td style="text-align: center; width: 48.4444px;">           36.5</td>
<td style="text-align: center; width: 48.4444px;">           24.9</td>
<td style="text-align: center; width: 49.3333px;">           53.7</td>
<td style="text-align: center; width: 51.1111px;">            1.0</td>
</tr>
<tr>
<td style="width: 100.889px;">

 S-Enjoy Service 
</td>
<td style="text-align: right; width: 46.6667px;">

1755 HK
</td>
<td style="text-align: right; width: 30.6667px;">         24.45</td>
<td style="text-align: center; width: 60.8889px;">                2,581</td>
<td style="text-align: center; width: 50.2222px;">           64.4</td>
<td style="text-align: center; width: 46.6667px;">           42.5</td>
<td style="text-align: center; width: 48.4444px;">           28.6</td>
<td style="text-align: center; width: 48.4444px;">           19.9</td>
<td style="text-align: center; width: 49.3333px;">           47.9</td>
<td style="text-align: center; width: 51.1111px;">            0.9</td>
</tr>
<tr>
<td style="width: 100.889px;">
 
Central China Ne 
</td>
<td style="text-align: right; width: 46.6667px;">

9983 HK
</td>
<td style="text-align: right; width: 30.6667px;">         10.36</td>
<td style="text-align: center; width: 60.8889px;">                1,664</td>
<td style="text-align: center; width: 50.2222px;">           59.0</td>
<td style="text-align: center; width: 46.6667px;">           30.3</td>
<td style="text-align: center; width: 48.4444px;">           20.5</td>
<td style="text-align: center; width: 48.4444px;">           15.4</td>
<td style="text-align: center; width: 49.3333px;">           34.0</td>
<td style="text-align: center; width: 51.1111px;">            0.9</td>
</tr>
<tr>
<td style="width: 100.889px;"> Powerlong Commer </td>
<td style="text-align: right; width: 46.6667px;">

9909 HK
</td>
<td style="text-align: right; width: 30.6667px;">         21.15</td>
<td style="text-align: center; width: 60.8889px;">                1,696</td>
<td style="text-align: center; width: 50.2222px;">           43.1</td>
<td style="text-align: center; width: 46.6667px;">           41.1</td>
<td style="text-align: center; width: 48.4444px;">           28.2</td>
<td style="text-align: center; width: 48.4444px;">           20.7</td>
<td style="text-align: center; width: 49.3333px;">           27.6</td>
<td style="text-align: center; width: 51.1111px;">            1.5</td>
</tr>
<tr>
<td style="width: 100.889px;"> Times Neighborhood</td>
<td style="text-align: right; width: 46.6667px;">

9928 HK
</td>
<td style="text-align: right; width: 30.6667px;">         12.38</td>
<td style="text-align: center; width: 60.8889px;">                1,574</td>
<td style="text-align: center; width: 50.2222px;">           85.3</td>
<td style="text-align: center; width: 46.6667px;">           45.3</td>
<td style="text-align: center; width: 48.4444px;">           26.4</td>
<td style="text-align: center; width: 48.4444px;">           17.8</td>
<td style="text-align: center; width: 49.3333px;">           68.6</td>
<td style="text-align: center; width: 51.1111px;">            0.7</td>
</tr>
<tr>
<td style="width: 100.889px;"> Sichuan Languang </td>
<td style="text-align: right; width: 46.6667px;">

2606 HK
</td>
<td style="text-align: right; width: 30.6667px;">         53.00</td>
<td style="text-align: center; width: 60.8889px;">                1,218</td>
<td style="text-align: center; width: 50.2222px;">           15.3</td>
<td style="text-align: center; width: 46.6667px;">           14.2</td>
<td style="text-align: center; width: 48.4444px;">           10.7</td>
<td style="text-align: center; width: 48.4444px;">             8.1</td>
<td style="text-align: center; width: 49.3333px;">           23.7</td>
<td style="text-align: center; width: 51.1111px;">            0.6</td>
</tr>
<tr>
<td style="width: 100.889px;"> Aoyuan Healthy Life </td>
<td style="text-align: right; width: 46.6667px;">

3662 HK
</td>
<td style="text-align: right; width: 30.6667px;">           7.71</td>
<td style="text-align: center; width: 60.8889px;">                   722</td>
<td style="text-align: center; width: 50.2222px;">           29.1</td>
<td style="text-align: center; width: 46.6667px;">           20.8</td>
<td style="text-align: center; width: 48.4444px;">           14.9</td>
<td style="text-align: center; width: 48.4444px;">           11.8</td>
<td style="text-align: center; width: 49.3333px;">           35.2</td>
<td style="text-align: center; width: 51.1111px;">            0.6</td>
</tr>
<tr>
<td style="width: 100.889px;"> Colour Life Service</td>
<td style="text-align: right; width: 46.6667px;">

1778 HK
</td>
<td style="text-align: right; width: 30.6667px;">           4.00</td>
<td style="text-align: center; width: 60.8889px;">                   751</td>
<td style="text-align: center; width: 50.2222px;">             9.8</td>
<td style="text-align: center; width: 46.6667px;">             9.3</td>
<td style="text-align: center; width: 48.4444px;">             8.5</td>
<td style="text-align: center; width: 48.4444px;">             7.8</td>
<td style="text-align: center; width: 49.3333px;">             8.2</td>
<td style="text-align: center; width: 51.1111px;">            1.1</td>
</tr>
<tr>
<td style="width: 100.889px;"> Binjiang Service </td>
<td style="text-align: right; width: 46.6667px;">

3316 HK
</td>
<td style="text-align: right; width: 30.6667px;">         18.04</td>
<td style="text-align: center; width: 60.8889px;">                   643</td>
<td style="text-align: center; width: 50.2222px;">           36.7</td>
<td style="text-align: center; width: 46.6667px;">           27.9</td>
<td style="text-align: center; width: 48.4444px;">           21.3</td>
<td style="text-align: center; width: 48.4444px;">           17.2</td>
<td style="text-align: center; width: 49.3333px;">           28.8</td>
<td style="text-align: center; width: 51.1111px;">            1.0</td>
</tr>
<tr>
<td style="width: 100.889px;">Adjusted Sector Avg*</td>
<td style="width: 46.6667px;"> </td>
<td style="width: 30.6667px;"> </td>
<td style="text-align: center; width: 60.8889px;"> </td>
<td style="text-align: center; width: 50.2222px;">49</td>
<td style="text-align: center; width: 46.6667px;">34.5</td>
<td style="text-align: center; width: 48.4444px;">24.5</td>
<td style="text-align: center; width: 48.4444px;">18.4</td>
<td style="text-align: center; width: 49.3333px;">34.5</td>
<td style="text-align: center; width: 51.1111px;">1.1</td>
</tr>
</tbody>
</table>
Source: Bloomberg
<ul>
<li>After the recent capital raise (see: <a href="https://www.smartkarma.com/insights/times-neighborhood-placement-opportunistic-raise-to-lock-in-cash-for-m-a" target="_blank" data-smartkarma-citation="insights:41016" rel="noopener">Times Neighborhood (时代邻里) Placement - Opportunistic Raise to Lock in Cash for M&amp;A)</a>, net cash levels on our estimates are around 1.5 bn RMB (14% of market capitalization).</li>
<li>The company has demonstrated reasonable cost control and enhanced its margins by 150 bps YoY at the gross profit level.  In addition to this, it has lowered its SG&amp;A by 190 bps YoY. We had highlighted in our prior insight (<a href="https://www.smartkarma.com/insights/times-neighborhood-an-explosive-growth-option-in-the-property-management-space" target="_blank" data-smartkarma-citation="insights:40720" rel="noopener">Times Neighborhood: An Explosive Growth Option in the Property Management Space),</a> the measures the company would be taking to increase margins. In H1 2020, <a href="https://www.smartkarma.com/entities/times-neighborhood-holdings" target="_blank" data-smartkarma-citation="entities:28666:1" rel="noopener">Times Neighborhood (9928 HK)</a> has demonstrated excellence in its ability to execute on this.</li>
<li>After completing three acquisitions in H1 2020, <a href="https://www.smartkarma.com/entities/times-neighborhood-holdings" target="_blank" data-smartkarma-citation="entities:28666:1" rel="noopener">Times Neighborhood (9928 HK)</a> 's overall contracted GFA (inclusive of municipal sanitation and urban public services) was 105 mn sqm and managed GFA 79 mn sqm (increases of 83% YoY and 70% YoY respectively).</li>
</ul>

Times Neighborhood (9928 HK) reported stellar results for their H1 2020 on the 12th of August 2020. 
Key highlights of the results 

Profit for H1 2020 was up 99% YoY (76% YoY exclusive of the listing expenses). Despite a rally in the sector, Times Neighborhood (9928 HK) remains one of the cheaper names amongst its peers on a PEG(x) multiple. The company is well on track to achieving its forecast of 220 mn RMB PAT for 2020, representing a 90% YoY profit growth (exclusive of listing expenses). From the table below, you can see it is one of the highest growth names in the sector.


       


Company
Ticker
Price
Mkt cap (US$m)
PER 2019 (x)
PER FY20 (x)
PER FY21 (x)
PER FY22 (x)
3-Yr EPS CAGR (%)
PEG




 Country Garden S 



6098 HK

         49.30
              17,553
           70.4
           52.7
           38.4
           28.6
           35.0
            1.5




 A-Living Servi-H 



3319 HK

         43.30
                7,449
           42.2
           30.0
           22.9
           18.2
           32.3
            0.9




 Poly Property -H 



6049 HK

         77.30
                5,519
           57.2
           52.1
           38.0
           28.0
           26.9
            1.9



 
Greentown Service 



2869 HK

         10.20
                4,234
           53.8
           42.5
           32.6
           25.5
           28.2
            1.5




 China Overseas P 



2669 HK

           7.59
                3,219
           46.4
           36.0
           27.9
           22.3
           27.7
            1.3




 Ever Sunshine Li 



1778 HK

         14.70
                3,168
           90.4
           56.1
           36.5
           24.9
           53.7
            1.0




 S-Enjoy Service 



1755 HK

         24.45
                2,581
           64.4
           42.5
           28.6
           19.9
           47.9
            0.9



 
Central China Ne 



9983 HK

         10.36
                1,664
           59.0
           30.3
           20.5
           15.4
           34.0
            0.9


 Powerlong Commer 


9909 HK

         21.15
                1,696
           43.1
           41.1
           28.2
           20.7
           27.6
            1.5


 Times Neighborhood


9928 HK

         12.38
                1,574
           85.3
           45.3
           26.4
           17.8
           68.6
            0.7


 Sichuan Languang 


2606 HK

         53.00
                1,218
           15.3
           14.2
           10.7
             8.1
           23.7
            0.6


 Aoyuan Healthy Life 


3662 HK

           7.71
                   722
           29.1
           20.8
           14.9
           11.8
           35.2
            0.6


 Colour Life Service


1778 HK

           4.00
                   751
             9.8
             9.3
             8.5
             7.8
             8.2
            1.1


 Binjiang Service 


3316 HK

         18.04
                   643
           36.7
           27.9
           21.3
           17.2
           28.8
            1.0


Adjusted Sector Avg*
 
 
 
49
34.5
24.5
18.4
34.5
1.1



Source: Bloomberg

After the recent capital raise (see: Times Neighborhood (时代邻里) Placement - Opportunistic Raise to Lock in Cash for M&amp;A), net cash levels on our estimates are around 1.5 bn RMB (14% of market capitalization).
The company has demonstrated reasonable cost control and enhanced its margins by 150 bps YoY at the gross profit level.  In addition to this, it has lowered its SG&amp;A by 190 bps YoY. We had highlighted in our prior insight (Times Neighborhood: An Explosive Growth Option in the Property Management Space), the measures the company would be taking to increase margins. In H1 2020, Times Neighborhood (9928 HK) has demonstrated excellence in its ability to execute on this.
After completing three acquisitions in H1 2020, Times Neighborhood (9928 HK) 's overall contracted GFA (inclusive of municipal sanitation and urban public services) was 105 mn sqm and managed GFA 79 mn sqm (increases of 83% YoY and 70% YoY respectively).


Times Neighborhood: H1 2020 Excellence in Execution